Examination of Witnesses (Questions 840-859)|
THURSDAY 27 NOVEMBER
Q840 Mr Burstow: How do you draw attention
to the nutritional issues at that point of decision?
Mr Hilton-Johnson: It is not about
drawing attention at any particular point; it is about providing
information generally that is available to customers so that they
can make the decisions they want to.
Q841 Dr Naysmith: I have occasionally
bought a hamburger myself but I have never been given any nutritional
Mr Hilton-Johnson: It is available
should you wish to look at it.
Q842 Mr Bradley: A Big Mac would not
be a super size meal. That would be an ordinary meal as opposed
to a little Mac?
Mr Hilton-Johnson: The Big Mac
does not change size. My understanding is that if you buy a Big
Mac meal now compared to, say, 1984 it is quite substantially
lower in its fat content and its calorie content.
Q843 Mr Bradley: That does not come into
the category of a super size meal?
Mr Hilton-Johnson: That is just
a meal. If you wanted to have a larger drink or larger french
fries, you could do that if you wanted to.
Q844 Dr Naysmith: I wonder if any of
the other members of the panel have any comment to make on pushing
larger sizes? I know that Cadburys do that to a certain extent
although I understand that their competitors, Mars, do it much
Mr Cosslett: A bit more but not
that much more. We make a very wide range of sizes available.
Most of the bigger ones are designed for sharing. With Christmas
coming up, most people will have a tin of chocolates in the house
for sharing and I think that is generally understood. I think
the area you are talking about is the single bars. Again, three
per cent of the confectionery market is in those products. I think
the figure is slightly higher for Mars and is declining. They
were introduced for a very specific audience, very active people
in the late teens, who are pretty voracious consumers of most
things. They fill that need. It is basically a high activity product.
All chocolate has labelling that puts forward the calories, even
though perhaps the labelling could be stronger, but they are always
sold alongside other products of other sizes. People really have
the choice of standard size, the larger one or a bag of buttons.
Q845 Dr Naysmith: I am surprised when
you say that it is such a small percentage of the market and I
will tell you why. If you go in to get petrol, there is a whole
range of sweets on sale. King size is always there at least as
much as the standard size.
Mr Cosslett: Service stations
are very highly visible and we all go there but they are a very
small part of the confectionery industry. It might surprise the
Committee to know that half the sweet shops in Britain have closed
in the last 25 years. Petrol stations are a relatively small part
of the consumption and King size bars are their market. If you
are trying to have a product which appeals to active, energetic
members, they spend a lot of time in cars and going into petrol
stations. That is the place where you will find them most of all.
But it's a very small part of the business.
Q846 Dr Naysmith: Presumably, businesses
want to try and grow that?
Mr Cosslett: No, it is not designed
that way. Our profitability on those products is lower.
Q847 Dr Naysmith: How can it be lower?
Mr Cosslett: Because we give away
a much bigger chunk of chocolate.
Q848 Dr Naysmith: For an increased price?
Mr Cosslett: It is not necessarily
proportionately. So we are not particularly inclined and motivated
to sell King size bars.
Q849 Dr Naysmith: Kraft has recently
agreed to issue smaller portions on a number of their products
and they have said it is on health grounds. I wonder if any of
you are prepared to follow them?
Mr Hilton-Johnson: I am not quite
sure what Kraft have said or done so I would not wish to comment.
From our perspective, we offer a range of portion sizes for people
to decide themselves what they want. Increasing to a slightly
larger portion is likely to have a comparatively small effect
on the overall calorific value, even before you start thinking
about questions such as diet and the fact that people come in
two or three times a month. Therefore, it is going to have a very
small effect on their diet. Also, a Big Mac at the moment is about
590 calories. If you buy, for example, a cheese and tomato sandwich
from a leading supermarket retailer, you may find that that is
600 calories or 650 calories.
Q850 Dr Naysmith: All morning we have
been arguing about the balance between calories in and calories
out. There has been no disagreement that what we want to do is
encourage people to take more exercise. Is it not reasonable to
try to encourage people to eat a little less as well?
Mr Hilton-Johnson: It is sensible
to encourage people to eat a healthy, balanced diet and if on
occasions they want to eat more then surely that is okay.
Q851 Mr Bradley: Accepting your point
that the market is relatively small, where you are selling the
king size product in petrol stations, your target market is in
a sense the most inactive market because they are eating a bigger
product, sitting in a car or lorry, the out part of the equation
is even lower and the in part is higher. You are contributing
to that problem. Do you see any responsibility for redressing
that by not encouraging people to buy big bars?
Mr Cosslett: There is a bit of
an assumption there that people who use products in petrol stations
are necessarily overweight or more sedentary than others. I am
not sure that would be proven. Our products are portable and you
can eat them over a period of time. People do. If you look at
most of our king size bars, they have the chunks and they are
designed to be broken. A lot of our bigger products are eaten
a bit and then consumed later, the next day. That is what people
do because it is transportable and it does not go off. It does
not get cold or hot but generally speaking the products stay around
over a number of days.
Q852 Mr Bradley: I do not know if there
is research on that and I may not be a good example but if you
buy a chocolate bar you tend to consume it pretty quickly. If
you have two Twix bars you do not save one and say you will eat
it tomorrow. You eat the second one just as quickly as the first
Mr Cosslett: I understand your
point but if you are offering adults at petrol stations an open
range of products for them to choose from and the labelling says
what is in them and they know instinctively about confectionery,
that is their choice. It is a market that is a small part and
it is declining. The value equation is one we may want to review.
This thing about going from a smaller to a bigger bar and it being
more attractive is something we could perhaps look at because
it is not our intention to induce people to eat them in an impulse
purchase situation. I cannot talk for my competitors but I certainly
think we could review that to see whether we should make it clear
on the packaging that the role of it is for eating some now and
some later to try and get over the kind of behaviour you are describing.
Q853 Mr Burstow: Perhaps I can move on
to marketing and sponsorship issues. I was looking at the table
that was included in the Pepsi submission regarding the importance
of companies to be socially responsible. I was struck by the quite
significant shift in terms of consumers calibrating companies'
social responsibility in terms of their decisions about whether
or not to buy products from those companies. It has gone from
28% in 1998 considering it very important to 46% in 2001. I wonder
if each of you could say a little bit about how much your companies
spend on corporate social responsibility activities, perhaps split
by sports, charitable work and local community activity in action?
Could you give us an idea of the spend on each of those?
Mr Glenn: The MORI opinion poll
company that did the research said this was probably one of the
most significant shifts they had seen in social opinion in all
their experience of polling. The reason we put it in our submission
is that we are making the general point that it is in our interest,
as commercial enterprises, to go with the grain of how consumers
feel. As well as coming from a personal sense of obligation, corporate
social responsibility makes sense. At the risk of sounding like
I am avoiding the question, I cannot give you the detailed breakdown
that you want here and now. Consumers, individuals, the voters,
judge companies not on the basis of individual corporate and socially
responsible programmes. Free books in schools have been important
but corporate social responsibility starts first and foremost
with the type of employer that you are, whether you employ responsibly.
We seek to exceed government minima in terms of safety. We pay
above average in the neighbourhoods where we work. We are one
of the few businesses that have kept a final salary pension scheme
going. That is the foundation of corporate social responsibility,
which is how good an employer and neighbour you are. On top of
that, we found the taking in of charity budgets away from the
chairmen and putting them into the marketing departments resonates
well with consumers. In the case of Walkers in the UK, we spent
the equivalent of £35 million of retail value over the last
few years in linking the purchase of Walkers crisps and snacks
and books for 30,000 or so schools in the country. That is one
of the biggest cause related marketing campaigns that we do. In
addition, although I cannot describe the monetary value to it
yet, we are a partner with the Football Association in terms of
what we call the Youth Pillar. It is difficult with a lot of the
submissions one is asked to fill in, in terms of the corporate
social responsibility index, but we offer a lot of value in kind
by allowing our employees to volunteer time. I do not know how
you put a price on that. I guess you could in terms of time well
spent but it is significant. I do not have the breakdown but I
would be very happy to try and provide it to you. The key thing
is if consumers thought we were offering them bad products at
poor value, making them unhealthy and were trying to assuage our
feelings of guilt by doing some of these high profile programmes,
we would not get anywhere. The fact of the matter is consumers
see Walkers, Cadburys and Kellogg's as pillars of the establishment
with trusted brands and they respect that.
Q854 Mr Burstow: If you can supply the
information later that would be very helpful. I think you have
been able to send out seven million books so far. I wanted to
get a handle on what that might equate to in terms of numbers
of crisp packets. I was doing some number crunching and I may
have got it completely wrong but I came up with a figure of about
1.2 billion packs being required to achieve those seven million
books. Is that a gross under-estimate or an over-estimate?
Mr Glenn: The reason the scheme
has been so successful is that it offers terrific value for money.
Put yourself in the position of school teachers or school secretaries.
They have a number of these schemes offered to them. The reason
that free books have done so well over the years is that they
offer pretty good value for money. We think there is a return
of about 15%. If a packet of crisps costs you, say, 20 pence,
the value of a voucher for a typical book costs, say, £5
to buy and 100 vouchers will get you there, it is a pretty good
return on investment.
Q855 Mr Burstow: On the figures I have
seen it seems to be about 172 packs per book.
Mr Glenn: 100 tokens gets you
a book of the equivalent cost of about £5. What schools have
done over the years is traded up to more expensive books. The
success of the scheme has been because it works for schools.
Mr Hilton-Johnson: I would agree
entirely with your comments that social responsibility is not
just about community activities. It is much more everything that
you do as a company, your employment practices, your dealings
with your suppliers, what you expect of them and their employees.
It is your environmental record and so on. Community activities
inform part of that. Last year, we published our first worldwide
corporate social responsibility report. The spend for us is very
difficult to quantify. I can try and provide you some information
later. In our case it is partly difficult because it goes on in
1,200 locations throughout the country. We too have schemes with
volunteering but there are two very important aspects of my company's
community activities that I would like to draw to your attention.
The first one I have already mentioned. That is creating 10,000
new community football coaches over the next four years. That
is an increase in accredited football coaches of 57% over four
years. You do not have to be a McDonald's customer to be coached
in this way or to benefit. The other thing we contribute to is
Ronald McDonald Children's Charities. That is responsible for
something like 23 or 24 rooms and houses throughout the country
where parents can stay when their children are sick and in hospital.
Some of these are comparatively small. The largest has 65 bedrooms
at Alder Hey in Liverpool.
Mr Cosslett: Most people would
recognise Cadbury as one of the companies that takes its social
obligations extremely seriously going back to the 19th century
with the provision of housing for its workers and the creation
of Works Councils Sunday's off. That spirit endures. Today, we
have a direct financial contribution into charitable causes in
the UK of over £2.5 million a year. The majority of our effort
though is through our employee volunteering scheme. We now have
1,500 people in the UK engaged regularly, at least once a month,
on community enterprises, many with schools. During our Get Active
promotion, we had about 300 of those volunteers talking in local
schools about five a day messages and the need for a healthy lifestyle
and activity. We are out there, trying to push the right message.
1,500 people are involved in social programmes. We have a homeless
sleep-out this weekend at St Basil's in Birmingham. Everyone is
welcome to join in .It is something we take extremely seriously.
It is something I am remarkably proud of for our organisation
because these are ordinary people, giving up their free time.
We are a founder member of the Business in the
Community movement, so it is an enormous important part of what
we do. We obviously take our environmental responsibilities way
beyond what is required. In just about every facet of business
we like to think of ourselves as the gold standard.
Mr Mobsby: Very similar to my
colleagues here, whether it is in the areas of employment or environmental
aspects, there are many of those, health and safety, the health
of employers, et cetera. Perhaps the things you are more interested
in would relate to activities within the community, as you describe
them. We donate money very directly, particularly within the local
communities in which we are based where we feel we have most influence.
Also, the point others have made as well, one of the ways that
we have been advised and found most useful is providing the services
of our people, very often they may have money, they may not have
the skills and expertise that our people can bring, so that can
be provided on a regular basis and we do have people working in
the community full-time. Also the volunteer time that our own
employees choose to focus on, particularly education. In terms
of contributions we contribute about £1 million a year. From
a commercial activity standpoint we contribute to Child Line,
we have contributed about half a million pounds to that particular
charity over time. We are involved in numerous other initiatives,
Get Smart, which is a media literacy programme. There are many
different facets to it.
Q856 John Austin: A number of companies
in the food industry, including some of yourselves, associate
products with sporting heroes and people in popular cultureI
do not want to get at Leicester City but Mr Lineker was awarded
the"Greedy Star Award" and the runner up was
Britney Spears, neither of whom is in any way obese or even overweight.
Is there an ethical issue about associating sporting heroes and
popular culture heroes with some of the products you provide?
Do you think there is an ethical issue?
Mr Glenn: We talked about it last
week after the last session. I think if there were an ethical
issue I do not think we would do it. What we try and do with advertising
is we try and associate our adverts with popular people to make
the adverts effective, that is what we try and do. Nowhere in
our advertising, partly a matter of choice, but also partly because
we are governed by a strict advertising codenot just for
the children but for all advertisingwe suggest if pop star
X consumes a product you will become like the pop star. It is
very, very controlled in terms of the association you make with
the celebrity. If you look at Walkers advertising with Gary Lineker
it does not encourage over-consumption, it does not suggest you
are going to be a sports star, it is just using a personality
who happens to like our product, he is from Leicester, consumes
the product himself and is very happy about doing that. It is
part of a simple pleasure in life and that is what comes over
in the advert.
Q857 John Austin: Do you think there
is a difference in the way that adults perceive advertising and
children perceive advertising?
Mr Glenn: We know there is. Psychologically
children's cognitive and critical facilities are less well developed,
that is part of being a child, which is why the advertising code
for children is particularly strong.
Q858 John Austin: In what way are they
Mr Glenn: Let me give you some
examples, the draft global standard for regulating advertising
to children is effectively based on the UK code, which should
tell you that the UK code is very strong indeed. For example what
it cannot do is it cannot suggest to children you should replace
a snack instead of a main meal, you cannot suggest you eat it
before you go to bed, it cannot suggest over-consumption and it
absolutely cannot suggest that you should go and ask your Mum
to go and buy it. All those things are prescribed by the code.
Q859 John Austin: In the media strategy
for Walkers Wotsits they talk about "Wotsits are for meI'm
going to buy them when I get the chance and pester Mum for them
hen she next goes shopping".
Mr Glenn: We looked at that two
weeks ago, yes it was a brief, we looked at the advert, and I
am sure you have, and in no way did it encourage pester power.
There was no mother in the advert. The advert was approved by
the ITC. We did not get any letters of complaint.